Despite rumors to the contrary, Yahoo was the only company vying for the blogging platform.

Tumblr CEO David Karp—who just became a very rich man—will stay at Yahoo for four years and retain much control over the service, says Swisher.

What made Tumblr so appealing to Yahoo CEO Marissa Mayer was its youthful demographic and strong mobile usage. Quoting data from comScore, Swisher points out the company's mobile usage has ramped up in recent years, and that "a quarter of the service’s U.S. visitors now come from mobile devices."

Tumblr will be Mayer's biggest purchase so far. Since starting last year, she's mostly concentrated on acquiring small startups.